STOCKTON - The city of Stockton illegally privatized its water and sewer operations and must retake control of its facilities within six months, a judge has ruled.

David Siders

STOCKTON - The city of Stockton illegally privatized its water and sewer operations and must retake control of its facilities within six months, a judge has ruled.

The city's failure to perform a required environmental review was "improper," San Joaquin County Superior Court Judge Elizabeth Humphreys said in a ruling that reached City Hall on Monday.

The ruling was a victory for environmentalists, who have sought to dismantle the $600 million contract between the city and water conglomerate OMI-Thames Water since the City Council approved it in 2003.

"I'm practically speechless," said Dale Stocking, chairman of the Sierra Club's Mother Lode Chapter. "This is a sweeping victory ... The city was wrong, and it's been proved."

It was unclear Monday how the city would respond to the ruling. Mayor Ed Chavez and Vice Mayor Gary Giovanetti said they were disappointed, and City Attorney Ren Nosky said the city could consider an appeal. The council has not yet decided what to do.

Humphreys' ruling rejected the city's long-standing claim that it was sufficient to review the environmental impact of each individual construction project OMI-Thames did, and that the city was not required to consider the overall impact of the contract itself.

The Concerned Citizens Coalition, Sierra Club and League of Women Voters of San Joaquin County — the groups that sued the city — disagreed. So did Attorney General Bill Lockyer, who filed a brief in support of the lawsuit last year. They claimed the contract allowed construction projects that could damage the environment.

In her ruling, Humphreys confirmed that opinion, finding there is substantial evidence that the 20-year deal between the city and OMI-Thames "will have significant environmental impacts."

Municipal Utilities Director Mark Madison said privatization has saved taxpayers millions of dollars and helped the city comply with state water pollution standards. He said OMI-Thames' environmental record is sound.

Environmentalists have said it is not. They have claimed the water and sewer utilities are poorly maintained and that sewer spills have damaged the environment.

However, the controversy surrounding the privatization deal has always been about more than the environment. Opponents said the way in which it was approved - it was signed 13 days before voters approved a measure that would have required a public vote on the water deal - was evidence of then-Mayor Gary Podesto's heavy-handed style.

It was "another example" of Podesto and then-City Manager Mark Lewis ignoring the law, Councilman Steve Bestolarides said Monday. He voted against the deal in 2003.

Podesto said he and other officials at the time were acting on a legal opinion they trusted. He said the contract has been a success for taxpayers and the environment and that the judge's ruling is "too bad for the city."

Rachel Hooper, an attorney for the plaintiffs, said water and sewer services are public health and environmental matters best served by government, not business.

"When you have a public entity running utilities like this, they are far more accountable to the public, the citizens, than a private company is," she said. "This is what this case is really about."

OMI-Thames said in a press release that the company is disappointed in the ruling but will continue to run the city's waterworks while the ruling is being reviewed.

A union official representing company employees could not be reached for comment late Monday. City officials said it is uncertain what effect the ruling might have on the company's employees. The ruling and any action it causes is unlikely to affect water delivery or sewage treatment, City Manager Gordon Palmer said. The city has provided that service before, he said.

Contact reporter David Siders at (209) 943-8580 or dsiders@recordnet.com. Visit his blog at www.recordnet.com/blogs